the dark art of psychological pricing strategy

“Psychological pricing involves far more than just presenting value. It also involves knowing your buyer better than he knows himself.”

~ Chandell Labbozzetta

What Does Psychological Pricing Entail?

I’d like you to think very carefully about the above question because it is absolutely critical to your understanding of psychological pricing and why people do – or do not – push back when you tell them the price.

Most of the time it’s not actually the dollar amount they’re pushing against – contrary to popular belief not everyone wants to buy the cheapest product available.

… It’s not even the value proposition you present (although that’s important as I’ve mentioned elsewhere).

… At the heart of every sale the buyer has to say “yes” to two questions:

  1. Do I trust this person and believe what they are telling me is true; and
  2. Do I like this person enough to work with them or the company they represent. (Note the modifier “enough” because it’s very important)

This means that one way or another you have to create some level of rapport AND you absolutely MUST show that you understand them. If you can’t do those two things then you might just as well throw your pricing strategy out the window – it doesn’t matter if you charge $2, $200, $20,000 or any other amount – you’ll be confronted with suspicion and objections. 


It’s About the Psychology!

I started my career in sales when sales training was mostly a question of scripts and pushing for the sale… And I hated it with a passion.

I really didn’t like the way that it made me feel and I would watch my mentors kind of push people into signing on the dotted line, see the hunted look in the victim’s eyes and vow never to do that to anyone.

So, I didn’t.

Instead, I studied up on the product.

I studied up on the person / company I was visiting.

I prepared myself thoroughly.

… And closed an incredibly high number of appointments and sales and won almost every sales award.

I quickly realised that it wasn’t a question of the price of the product, success lay in my understanding of the psychology of the buyer – once I had that, my pricing strategy fell right into place and the buyer would happily accept the product that I had already guessed would be most appealing to them.

In other words, my psychological pricing strategy became:

  1. Understand my buyer’s psychology and preferences;
  2. Select the product or package that was best aligned (the one they were really going to fall in love with); and
  3. Offer them that particular thing they already wanted.

This worked like a charm – unfortunately, it was very difficult to teach others – and if my prospect was in a hurry I couldn’t quite close the sale.

The Benefits of Psychological Pricing (No Degree Necessary)

You might be thinking – “Oh great, now I’ve got to get a degree in psychology if I want to sell.”

Actually, that did cross my mind at one stage and I was getting ready to enrol.

And then…

I went to a Neuro-Linguistic Programming (NLP) course. Practitioner level (for me) was more about sorting myself out as I’ve mentioned in my book Confident Closing: Sales secrets that grew a business by 400% in six months and how they can work for you! In Master Practitioner, however, I learned how to discover a person’s buying strategy in less than 5 minutes. At last, I had found the key!

This offered two incredible benefits:

  1. For myself: My preparation time was slashed and my system for understanding the other person became far more certain;
  2. For others: at last I had a simple multi-step formula that other people could implement flawlessly.

This one simple technique – layered on to the strategies I’d learned earlier cut 30 minutes off my sales calls and made it easy to get through to decision-makers. It also totally transformed my pricing strategy and the way I presented my pricing whether I was selling packages worth thousands, tens-of-thousands, or even hundreds-of thousands AND it was easily replicable.

What If I’m Not a Natural People Reader?

The great thing about this technique is that you’ll quickly discover that if you have ears and eyes you can learn to read people easily and effortlessly (which is not just helpful in your business life as you can imagine). It’s even better when you realise that once you are familiar with this technique and you add the tiny refinement I teach my students, you can move away from painful small talk and become the person your prospects and clients love to talking to so they always take your calls.

Becoming THE Preferred Supplier

This one small tweak took a powerful process to the next level and meant that skyrocketing sales was a no-brainer and taking advantage of psychological pricing meant that clients took the most suitable package for their needs close to 100% of the time – instead of playing it safe and taking something that wasn’t quite right for them.

If you’d like to learn more about how to do this yourself, why not join our next program?

Just imagine what would happen if you spent more time talking to ideal prospects and closing sales with qualified people in the next 3 months than you had in the past 3 years. This simple technique puts your pricing strategy on steroids – and makes every sales call fun and energising.

Sales Graph Hand Drawing By Businessman

“When your sales strategy depends on scripts rather than relationships and communications, any challenge or economic change can quickly become a crisis.”

~ Chandell Labbozzetta

How to Increase Your Sales Conversion

When your sales team and management focuses on tactics rather than strategy, you start to see the onset of what I call “Sales Sclerosis” or a hardening of the sales arteries.

Just as hardening of the arteries in your body is indicated by specific health problems – and can kill you if you ignore it – so the hardening arteries in your sales training and sales systems can be seen from some subtle indicators, long before they actually kill your lead flow.

When I was called to diagnose and cure the sales woes of a major Australian recruiting company they were already seeing their new sales decline and struggling to keep existing clients in a changing employment economy.

It turned out that the sales team had all been put through a highly tactical-focused sales training by a well-known company and they had all been told to “follow the script, or else!” Even the sales manager had been seduced buy the reputation of this company and, as sales started to slow and client retention slipped the advice was, “Just keep doing this, you’re learning and these are typical learner struggles.”

It wasn’t until the results for the second consecutive quarter showed a worrying decline that they started to doubt the sales process because, of course, ‘the pandemic changed everything.’ The truth is, that it didn’t really change everything, it just caused some disruption in an economy that had been quite stale for some years. This kind of disruption is part of life, so it should be part of your business philosophy as well.

If you’re trying to hire a sales trainer, there’s one question you need to get an answer to: “Are you teaching a fixed sales methodology?” If they say, “Yes, that’s the fastest way to increase sales conversion rate;” you should realise that it’s also very limiting. The answer you are looking for is: “No,  we teach an empowering mindset and flexible tools so you can sell anything to anyone.”

How to Develop Sales Skills and Cure Sales Sclerosis

Like so many other areas of life, building a successful sales team that delivers results in-season and out-of-season starts with your philosophy of sales. It is far, far easier to teach sales using a fixed script and system… and that method can be effective in specific economic scenarios, BUT there is a glaring problem with this approach: when the economy shifts or the perception of the economy shifts, the methodology stops working and your sales team is stuck with a tool that no longer works.

That is what happened to the recruiting company I mentioned before. The team had been taught a methodology and told to use it no matter what! There were even penalties applied if they were found to have deviated from the script – and of course, as soon as sales calls were shifted to online, recording them became painless. Instead of being tools to help them achieve results, the changing climate turned this methodology into a trap that stopped them making sales.

That’s why I am absolutely opposed to sales trainers that remove autonomy, judgement, and personal development from the sales equation. Techniques and tactics are useful, but the most skilled sales people (those who consistently deliver outstanding results) also hone their communication, judgement, and personal skills so that they have the flexibility to analyse any situation and determine whether the problem lies in the solution they are offering or in the sales presentation they are making.

Why Sales Training is Important

Too many sales people are taught that there is only one way to sell a particular item. That was what had happened in this team, even though several of them had been selling fairly successfully for some years.

When I started working with this team, one of the members was ready to quit. He had simply got sick of being forced into an uncomfortable methodology. His sales numbers had been fine at first, so he had ignored the sense of discomfort, but as his results dropped he really started to hate his job and complained that is was dull, he hated the constant rejection, and team meetings were simply miserable.

His numbers didn’t change right away, but as soon as he was given the tools to read his audience, the freedom to respond to his judgement, and the confidence to determine the root of both rejection and acceptance, his attitude changed. He started to look forward to his sales calls again. Six months later, he had developed his own style of sales that was incredibly flexible and effective and the team had started turning to him to resolve tricky sales situations where the clients’ need was evident, but they were struggling to see the value.


Developing a Resilient Sales Strategy

A resilient sales strategy is one that works in every economy. You can identify people who have learned a resilient sales strategy by their confidence, strong communication skills, and flexible thinking. Often, these people aren’t your typical extroverted personalities – they can even be quiet and reserved – which just makes their sales presentation and follow up even more authentic and persuasive.

A resilient sales strategy is a lifelong skill because it can be transferred to any context and media: one-to-many, one-to-one, TV, face-to-face meetings, life audiences, virtual meetings and it results in positive outcomes for (almost) everyone involved.

If you’re interested in learning more about how to develop a resilient sales strategy for your or your team, go to to discover more.

“The easiest way to maximise your profits is to get the perfect balance between price and value. Do that, and your price elasticity is close to infinite.”

~ Chandell Labbozzetta

How Do You Determine the Value Your Service Delivers?

The higher the perceived value of your product or service, the easier it is to charge a high price for it. I’ve noticed that you get a lot more objections during sales conversations when a prospect thinks the price is too low for the value you present than if they think it is expensive.

When I’m working with a business or a department to assess their price, we start with the bottom-line price (see Pricing Strategies to Increase Sales In Service Businesses) and – in a completely separate exercise – we brainstorm all the ways in which it adds value.

I have some specific exercises that I use to explore many different aspects of the value proposition including:

  • Time saved
  • Peace of mind
  • $ value
  • Freedom gained
  • Customer benefits
  • Employee benefits
  • Owner benefits

Like all brainstorming efforts, the real value of this exercise is exposed when you have ‘bled out’ your ideas at least twice. We don’t stop until we have more than 100 specific value prospects listed because it’s only then that you are starting to dive below the surface and come up with things that make a real differential.

Talking to your clients is another way of learning how they perceive the value of your service. You’ll often discover aspects of the value that you overlooked, but which are really important to your existing (and future) customers.

The more clearly you (and your sales team) can articulate the specific problems your product or service solves and the way it improves people’s lives, businesses, and incomes, the easier it becomes to sell more and to raise your prices on everything you sell.

Do Price Hacks (like ending your prices with a 9 or 7) Really Have an Effect on Sales?

There’s a lot of nonsense talked about the importance of ending your price with a 9 or a 7. The data is based on very specific products in a specific niche at a particular time in the evolution of the internet. For most service businesses – and even products – it makes very little difference.


when you jump the line to another decimal place – or when you jump up another digit between 10,000 and 100,000. Let me demonstrate:

  • There is a whole category reaching from $1 to $99 – in this range it doesn’t really matter which particular number you choose (if you stack the value to price ratio correctly).
  • $100 – $999 is another category and again, in this price range there’s no difference.
  • $1000 – $10,000 is the next bracket in which your absolute digits have very little impact on whether people buy or not.
  • $10,000 – $20,000 – $30,000 … $99,999 all exist as separate price brackets that can make or break a sale.
  • After this, the ‘new decimal place’ rule is back in play – there is very little difference (to the buyer) between $100,000 and $800,000 as long as the value is demonstrated.

So… Your best pricing strategy to boost sales is to ask:

  1. Given the verifiable value of my product or service, which price bracket does it fit into?
  2. Is there anything I could do to nudge it into a higher price bracket?
  3. How can I position my product or service so that the price I am asking, it is a steal?

In my experience, businesses that focus on this strategy make more profits and sales than those who hyper-ventilate over whether their price should end in a 7, a 9, a 5, or a 3 – and (in any case) for most service businesses, you won’t actually get enough experimental data to make an informed decision.


The Most Powerful Sales-Oriented Pricing Technique for Service Businesses

“What your customers say they will do and what they will actually do are two completely different animals.”

~ Chandell Labbozzetta

Talk to the people who didn’t buy – and ask them what stopped them.

Talk to the people who did buy – and ask them what tipped the scales.

Above all… LISTEN to your customer feedback and questions, and those of people who have been referred to you.

The biggest mistake business owners make is that of listening too hard to non-buyers (who have opinions, but not experience) and not paying enough attention to their customers and the people they refer.

One of my clients (a personal trainer) doubled her sales after talking to someone who was referred to her. She asked the person, “What did Jim say that made you call me?”

“Oh, he said that you’d make every muscle ache, but that I’d never even dream of skipping a session because they were so much fun and the results were evident.”

As soon as she started talking about people never wanting to skip a session and organising their holidays around her availability she saw an immediate change – but it wasn’t something she had really considered talking about previously.


“You shall not pass!”
~ Gandalf the Grey

What is a Pricing Strategy and Should I Use One?

When I ask many service business owners what their pricing strategy is and how they arrived at their current prices, I’m usually greeted with an embarrassed silence followed by answers like:

  • My pricing strategy was developed by looking at my competitors and finding out what they charge;
  • I always set my prices by adding or subtracting $x or x% from my competition;
  • I carefully calculate how much it will cost me to deliver the service and add a fixed margin;
  • My pricing is based on an hourly rate;
  • My initial pricing is designed to get customers in the door and then I expect them to see the value I deliver and agree to pay a higher ongoing rate;

Sometimes I also get responses like:

  • My pricing strategy is based on the value I deliver; OR
  • Pricing varies depending on who I am talking to and what I think they will agree to pay.

A pricing strategy is like every other strategy you implement in your life: it is either conscious or unconscious. If you expect people to pay you for your services then you do have a pricing strategy, the question you need to ask is…

Am I Using the Most Effective Sales Oriented Pricing Strategy to Increase My Profits?

The truth is, pricing options for any item are almost infinitely elastic – and that is especially true for service businesses.

The cost of the ingredients used to prepare food at a Michelin Star restaurant has very little relationship to the price diners pay to eat there… (Although those restaurants aren’t always an example of profit-maximising pricing!) At Masa in New York City, you can pay $650-$800 per person for sushi – and you need to book your table well in advance. Meanwhile, at the food court down the street, you can get an almost identical quantity of take-away food for $8.95 – or you can pick some sushi up at the grocery store for even less. One sales oriented pricing strategy is based on exclusivity and scarcity, the other is based on volume… And that doesn’t even take into account the many other styles in between these extremes.

However, at the top-end of the pricing scale products and services have a cachet that gets them talked about and leads to more opportunities and more sales, so higher prices almost always drive both your profits and your sales upwards.

When it comes to service businesses, your pricing strategy must ensure that you not only cover your costs, but also include a profit margin that you are happy to sustain. From this point, everything you add to your service should also increase your profit margin.


  • If your core product costs $1000 to deliver and you decide you want a 50% margin, then you need to charge $1500 (or more)
  • If you add another service that costs you $1000 to deliver, then your margin should be higher than 50% (let’s say 75%) – so you charge $1750 for that extra

This is called cost-plus pricing… And as far as I’m concerned it’s a good strategy for establishing your absolute bottom line – that line below which you will not go!

Did You Calculate Your Pricing Using a Specific Strategy?

You’d be surprised how many people don’t really have a pricing strategy at all.

I mentioned the typical responses I get from service business owners during my sales trainings when I ask how they arrived at their current prices. But the truth is that after a little more digging, they plucked a number out of the air.

Even if they checked out the competition’s prices, they never asked if that price was profitable or even realistic for their business once they factored in all the costs and overheads they needed to cover. 

I’m starting here, because most businesses are so anxious to get people in the door that they don’t think about what it will take to cover your costs. The truth is that if you can’t pay your bills you:

  1. Won’t stay in business very long; and
  2. Won’t be able to satisfy your customers and serve them adequately.

So, Before you mention your price to anyone, you need to work out how much money you need to make per week and how that affects your prices. From that bottom line, you can go up as far as you like (remember Masa!)

How Will a Price Increase Effect Your Sales?

I want you to think about how you feel when you are about to deliver work at a price that barely pays your bills…

You made an offer at a price so low that you are embarrassed to even think about it now – but at the time you were overjoyed to think that something would come into your bank account. Now you have to deliver the result. Your motivation is low and you’re desperately hoping that the client will sign up for a more profitable deal, but you are afraid they are just price-shoppers. Everything you do feels like hard work.

Now compare that with the project for which you are charging a profitable rate. You are much more responsive to the client because you aren’t racing against the clock to make it work. They are much more likely to agree to another profitable project because they aren’t price-shopping… So, you make more sales from a price increase, because you are more motivated, energised, and confident about your ability to deliver the end-result.

You feel the difference. Your clients feel the difference. And your prospects feel the difference too.

Therefore, you make more sales in total… And each sale is more profitable.

“When I thought about building and training my team and all the hoops and processes I would have to follow I was overwhelmed. It wasn’t until I met someone who turned that nebulous list of ‘this is what you need’ into a structured system for doing it that my hiring and training became easy.”

`~ Chandell Labbozzetta

From Nebulous Goal to Clear Process

Several years ago my business was struggling. I was great at my sales metrics, but didn’t have a system for making my financials visible and between my book keeper, my admin staff, and my accountant, it was just too hard to track everything.

It wasn’t until I stepped into a program where I was guided to set up my bank accounts and buckets strategically, accountable for my reporting, and given/introduced to the tools for visualising everything in a systematic way that my results really changed.

It was a powerful lesson that changed the way that I implemented my own sales training programs.

Applying the Model to Sales Training

I took my learnings from that experience and applied it to the way I help clients build and implement their sales systems. Using the model of the financial accountability program to walk people through the process, I also added one key element: I included the training of an additional person (2IC or sales manager) into the program. You see, a business owner or founder needs to be on top of everything to do with sales, but they don’t necessarily want to do it all themselves forever… Or have to train their replacement.

  • So my sales training program included:
  • Theory of what, why, and how
  • Clear steps and processes for every step of the sales system
  • Tools for execution and measurement
  • Language tools and personalised guidance on developing your system AND…
  • Inclusion of a key team member in the program = Game Changer!

That last element means that while the owner knows everything that is going on, they aren’t responsible for execution or training (unless they want to be).

What About Training Your Team?

I loved this concept so much that it’s the kind of program I look for when it comes to refining and expanding every aspect of my business. So, when I thought about tools for recruiting and training my team, I knew I wanted something similar – a program that would waIk me through all the steps, help me build the systems, and allow someone else to attend alongside me – the person who would be responsible for implementing this. I knew that I needed to be aware of the whole process and able to support my team, but I really didn’t want to do it myself… And what I found was that such a program really doesn’t exist – so if you find one, let me know.

Sometimes Theory is NOT Enough!

The reason that group programs with synchronous trainings are so powerful is that they give you accountability and a forum for asking specific questions. A good trainer will answer individual questions fully, but also provide insights that help everyone else in the group apply the same information in their own context.

The ‘pressure’ of showing up live is also good for accountability, but really that level of motivation is only a tiny fraction of the story. A group program also gives space for every business to have more than one head in the room, which means you multiply the impact you bring back into your business without overloading your founder/CEO.

Think about it next time you sign up for any business development program and look for ones that actively encourage a second person to attend alongside as part of the package.


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